BYD shares have been more earthbound this year until recently, but have still nearly doubled, all of it since Sept. 7 — all the local EV players have risen since the new Chinese EV plan became more clear. The local players have also long been supported by Chinese government subsidies.
Warren Buffett's Berkshire Hathaway has long owned a stake in BYD through a $230 million share purchase it made in 2008. BYD has been volatile over the years, but sold more than 46,000 electric and plug-in hybrid vehicles in the first seven months of the year, according to the China Passenger Car Association. Buffett's stake is now worth $27 billion, based on BYD's 217 billion market cap in HKD (Hong Kong Dollar).
BYD profits rose 91 percent in the first half of the year driven by sales of electric buses and trucks — with trucking an area Musk is eager to expand into — as well as battery and solar panel sales. Tesla is also becoming a major player with its battery gigafactory and solar company SolarCity. Tesla is working on a major battery project for an Australian utility, and Musk recently made comments about rebuilding Puerto Rico's hurricane-hobbled grid. Goldman wrote that BYD results were only in line with expectations, and the company lowered guidance for the rest of the year.
BYD, for its part, has pushed production of its green buses into the U.S. market as well as focusing on China, selling them to cities like Denver and companies like Facebook. It recently announced a plan to triple the size of its Lancaster, California electric bus and truck factory.
"Now more people view BYD as a global company," BYD Motors president Stella Li said on CNBC in July.
The next generation of Chinese EV names may include NextEV/NIO and Future Mobility Corp., according to Goldman analyst David Tamberrino. New entrants' flexibility may help them drive lower price points than Tesla can meet, and push new features and technologies to market faster, he said.
There have been reports circulating since last month about a relaxation in joint venture requirements for foreign automakers. Other major automakers including Ford, Daimler, and General Motors also have plans to produce in China. Daimler, which has had a joint venture with BYD for batteries that goes back years, also struck a JV with BAIC for EVs over the summer.
"Local manufacturers are moving at a much faster pace than global peers regarding implementation of new technologies," Tamberrino wrote. "They believe this creates greater showroom traffic and interest in the brand."
But one thing they won't do is catch Musk by surprise. He has been saying for years that China may ultimately be No. 1 in sales for Tesla even if it remains a distant second to the U.S. today. "Long term we might sell more cars in China than the U.S., just because the Chinese market is so huge," Musk said as far back as 2014. Luxury-car sales, in particular, do well in China: Almost half of all Mercedes S class sedans are sold in China.
—By Tim Mullaney, special to CNBC.com